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Disinflation On, Disinflation Off

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What’s in Today’s Report:

  • Disinflation On, Disinflation Off (Scenario Table with Asset Performance Guide)
  • Chart – 2 Yr. Note Futures Approach Multiyear Lows
  • Chart – “Another Bull Trap” Update

U.S. stock futures are tracking global shares higher this morning as investors cheer better than expected economic data out of China.

Economically, China’s Manufacturing PMI jumped to 51.6 vs. (E) 49.9 in February, up from 49.2 in January, indicating the recovery process is gaining momentum. The Eurozone Manufacturing PMI, meanwhile, met estimates at 48.5.

Today, investor focus will be on economic data early beginning in Europe with the German CPI release at 8:00 a.m. ET (E: 8.7%). So far this week, European yields have led global yields higher on hot inflation data and if the German print is above estimates, expect that trend to continue and stocks to remain under pressure.

In the U.S. we will get the February ISM Manufacturing Index (E: 48.0) as well as the lesser followed Construction Spending report (E: 0.2%). Investors will want to see improving, but not overly strong growth metrics and fading price pressures to see some of the recent hawkish money flows ease.

Finally, there is one Fed speaker today: Kashkari (E: 9:00 a.m. ET), and as a voting member of the FOMC, his comments will be closely watched for any new hints at the Fed’s policy plans.

Economic Breaker Panel: February Update

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What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel – February Update
  • January Durable Goods Orders Takeaways
  • Breakout in Natural Gas Futures

Stocks futures are trading with modest gains this morning while Treasury yields are tracking European bond yields higher following stubbornly high inflation data overnight.

Economically, both Spanish and French CPI headlines were hotter than expected, above 6%, which saw European rates markets price in a 4% terminal ECB rate for the first time. Government bond yields across the Eurozone notably rose to multi-year highs.

Looking into today’s session, there are several economic reports to watch including: International Trade (E: -$91.0B), Case-Shiller Home Price Index (-0.5%), FHFA House Price Index (E: -0.3%), and Consumer Confidence (E: 108.5).

Traders will be looking for less signs of stagflation in the data as elevated inflation figures and weakening growth metrics were a headwind for equities last week.

Finally, the Chicago Fed’s Goolsbee (who just succeeded Evans) has his first speaking engagement since taking over the role at 2:30 p.m. ET, and as a voting member of the FOMC, his comments will be closely watched for any new clues about Fed policy plans in the months ahead. A notably hawkish tone, could easily cause another bout of volatility in risk assets this afternoon.

Tom Essaye Quoted in Blockworks on February 24th, 2023

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Risk-Off Is Back: Crypto, Equities Slide on Persistent Inflation

“To be clear, the report won’t be enough to change the Fed’s thinking (this is very old data at this point) nor was it enough to move bonds or currencies, but for a market that’s concerned about stagflation, this report won’t do anything to ease those concerns.” Tom Essaye added. Click here to read the full article.

Tom Essaye Joins BNN Bloomberg to Discus the FAANGs on February 23rd, 2023

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We could be approaching the death of the FAANGs: Tom Essaye

Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to recap earnings from big tech this week. Essaye says that Meta’s earnings were the worst from a business standpoint and says that Amazon and Apple are most attractive to him out of the group. He cautions watchers not to buy these dips and talks on other sectors he finds more attractive.
Click here to watch the full interview.

Tom Essaye Quoted in Forbes on February 21st, 2023

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‘Damage Is Done’: Stock Market Likely Set For Another Plunge As Economic Warning Signs Abound, JPMorgan Cautions

“Markets are admitting the Fed may not be close to done,” Sevens Report strategist Tom Essaye wrote in a Tuesday note, as stocks sank following worse-than-expected retail earnings. Click here to read the full article.

Tom Essaye Joins Yahoo Finance To Discuss The Economy on February 21st, 2023

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‘The economy is stronger than everybody thought,’ Sevens Report Research Founder says

Sevens Report Research Founder and President Tom Essaye to discuss the expectations for the Fed’s upcoming FOMC minutes meeting, the future of Fed policy pathway, why investors should remain on recession watch in 2023, and the outlook for markets. Click here to watch the full discussion.

Tom Essaye Quoted in Benzinga on February 17th, 2023

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3 Reasons The 2023 Stock Market Rally May Be ‘Another Bull Trap’

Tom Essaye, founder of Sevens Report Research, said Friday there are at least three warning signs that the rally could be yet another bull trap for investors. Market expectations for Fed rate hikes are now showing a 56% probability of a June rate hike, up from basically 0% just four weeks ago!” he said. Click here to read the full article.

Sevens Report Analysts Quoted in Market Watch on February 16th, 2023

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Energy Shares Fall as Oil Prices Edge Lower — Energy Roundup

The “primary risk to oil prices remains to the downside as recession warnings from the Treasury market point to a potential collapse in consumer demand in the coming months or quarters,” analysts at Sevens Report Research wrote. Click here to read the full article.

Sevens Report Analysts Quoted in MorningStar on February 16th, 2023

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Oil ends lower on signs of ‘sluggish’ U.S. consumer demand and a big build in supplies

The U.S. Energy Information Administration data so far this year has been “consistently bearish and pointed to sluggish consumer demand, hesitant refining activity, sizeable builds in oil stockpiles and incrementally rising domestic oil production,” analysts at Sevens Report Research wrote in Thursday’s newsletter. Click here to read the full article.

Sevens Report Co-Editor Tyler Richey Quoted in MarketWatch on February 14th, 2023

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Oil traders hit ‘sell button’ with U.S. set to release more crude from its Strategic Petroleum Reserve

The release plans were part of a congressional-mandate related to annual budgets that has been in place for almost a decade, Tyler Richey, co-editor of Sevens Report Research, told MarketWatch. But “when traders see an SPR release headline cross the wires, they think ‘more supply on the market’ and hit the sell button first and ask questions later.” Click here to read the full article.